How to avoid 8621 excess distribution for new US resident

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monster22
Posts: 5
Joined: Tue Mar 09, 2021 1:12 pm

How to avoid 8621 excess distribution for new US resident

Post by monster22 »

Hi,

I moved to the US from Canada in Feb 2020. I'm filing resident tax return in the US for 2020. After I moved to the US, I sold my mutual funds in my TFSA account. I didn't know I need to file form 8621 and pay tax for excess distribution until recently.

So I wonder is it possible to avoid the nasty excess distribution tax? Looks like mark-to-market might be an option, but it seems to be only applicable to individual stock traded on exchange. I had mutual funds in my TFSA account, is it possible to elect mark-to-market?

Thanks
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monster22
Posts: 5
Joined: Tue Mar 09, 2021 1:12 pm

Re: How to avoid 8621 excess distribution for new US resident

Post by monster22 »

This excess distribution rule seems very unfriendly to new tax payer who moves to the US with foreign funds. Is there a way to adjust my cost basis in TFSA account to the fair market value of the date I moved to the US?
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